Sempra Energy Inks LNG Deal with Gazprom

Sempra Energy has signed a Memorandum of Understanding with Gazprom to cooperate in the delivery and associated marketing of liquefied natural gas (LNG) in North America.

Donald E. Felsinger, president and chief operating officer of Sempra Energy, and Alexey Miller, chairman of Gazprom, signed the MOU in Moscow today. The non-binding agreement contemplates importing Russian LNG into Sempra LNG's receipt terminals under development in North America and marketing of the natural gas through an arrangement with Sempra Commodities.

"We are pleased to sign this agreement to help facilitate the movement of Russia's plentiful natural gas into the North American marketplace, where it is needed," said Felsinger. "This represents a strategic alliance between Gazprom, the world's largest gas company, and Sempra Energy, one of the largest natural gas marketers in North America."

"This agreement is an important step in providing Russian gas supply to the U.S. market," said Miller. "Sempra Global is well-positioned as a gas trading and transportation company in the United States and, because they do not intend to enter the production business outside the United States, they make an ideal partner for us."

Sempra LNG, a unit of Sempra Global, currently is developing three LNG receipt terminals in North America. Its Energia Costa Azul terminal in Baja California, Mexico, is under construction and on schedule to be operational by 2008. The Cameron LNG terminal near Lake Charles, La., is fully permitted and could begin operations in 2008. The third LNG receipt terminal, Port Arthur LNG, near Port Arthur, Texas, is in the permitting process at the Federal Energy Regulatory Commission and could be operational in 2009.

Gazprom plans to begin exports of natural gas to the United States this year. The company also will begin drilling in Shtokman gas field in the Barents Sea, one of the world's biggest offshore gas fields with almost 3 trillion cubic meters of reserves, and begin exports from it in 2010-11. Miller said that offshore technological challenges were not a concern because of the company's related experience with the Norway North Sea field.